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PROCESS SELECTION AND FACILITY LAYOUTChapter 6
MIS 373: Basic Operations Management
MIS 373: Basic Operations Management 2
LEARNING OBJECTIVES
• After this lecture, students will be able to 1. Compare the four basic processing types2. Describe product layouts and their main advantages and
disadvantages3. Describe process layouts and their main advantages and
disadvantages4. Develop simple product layouts5. Develop simple process layouts
MIS 373: Basic Operations Management 3
PROCESS SELECTION
• Process selection• Deciding on the way production of goods or
services will be organized
• Occurs when:• Planning of new products or services• Technological changes in product or equipment• Competitive pressure
MIS 373: Basic Operations Management 4
PROCESS SELECTION AND SYSTEM DESIGN
Forecasting (demand)
Product andService Design
TechnologicalChange
CapacityPlanning
ProcessSelection
Facilities andEquipment
Layout
WorkDesign
MIS 373: Basic Operations Management 5
PROCESS STRATEGY
• Key aspects of process strategy:• Capital Intensity
• The mix of equipment and labor that will be used by the organization
• Process flexibility• The degree to which the system can be adjusted to
changes in processing requirements due to such factors as
• Product and service design changes• Volume changes• Changes in technology
NEW PROCESS STRATEGY
HBR 12/6/12 Three Examples of New Process StrategyThere are three fundamental ways that companies can improve their
processes in the coming decade: 1. expand the scope of work managed by a company to include customers,
suppliers, and partners; • Shift to global, virtual, cross-organizational teams of specialized entities
that are knitted together to serve customers• To keep such a multiparty system from degenerating into chaos, virtual
process teams must have aligned goals and support systems.
2. target the increasing amount of knowledge work; and • Big data analytics• Crowdsourcing, e.g., innocentive.com, TopCoder.com & Heritage Health Prize
• HBR : Using the Crowd as an Innovation Partner
3. reduce cycle times to durations previously considered impossible• Agile processes• Managers must speed the flow of information so that decisions can be made
faster at all levels, from top to bottom.
MIS 373: Basic Operations Management 7
PROCESS SELECTION
Process choice is demand driven:
1. Variety: How much?
2. Equipment flexibility: To what degree?
3. Volume: Expected output?
• Process Types
MIS 373: Basic Operations Management 8
PROCESS SELECTION
Process choice is demand driven:
1. Variety• How much?
2. Equipment flexibility• To what degree?
3. Volume• Expected output?
Process Types
• Job shop• Small scale• e.g., doctor, tailor
• Batch• Moderate volume• e.g., bakery
• Repetitive/assembly line• High volumes of standardized
goods or services• e.g., automobiles
• Continuous• Very high volumes of non-
discrete goods• e.g., petroleum products
MIS 373: Basic Operations Management 9
TYPES OF PROCESSING
Job Shop BatchRepetitive/Assembly Continuous
Description Customizedgoods orservices
Semi-standardizedgoods or services
Standardizedgoods orservices
Highly standardized
goods or services
Advantages Able to handle a wide variety of work
Flexibility; easy to add or change products or services
Low unit cost, high volume, efficient
Very efficient, very high volume
Disadvantages Slow, high costper unit,complexplanning andscheduling
Moderate costper unit,moderateschedulingcomplexity
Low flexibility,high cost of downtime
Very rigid, lack of variety, costly to change, very high cost of downtime
MIS 373: Basic Operations Management 10
PRODUCT-PROCESS MATRIX
• The diagonal represents the “ideal” match
• Hybrid process are possible (e.g., job-shop & batch)
• Process choice may change as products goes through its life-cycles
Volume
Flexibility/Variety
Out of pocket costs
Opportunity costs
MIS 373: Basic Operations Management 11
PROCESS CHOICE EFFECTS
Project: used for work that is none routine with a unique set of objective to be accomplished in a limited time frame, e.g., launching a new product, publishing a book
Activity/Function Projects Job Shop Batch Repetitive Continuous
Cost estimation Simple to complex Difficult Somewhat routine Routine Routine
Cost per unit Very high High Moderate Low Low
Equipment used Varied General purpose General purpose Special purpose Special purpose
Fixed costs Varied Low Moderate High Very high
Variable costs High High Moderate Low Very low
Labor skills Low to high High Moderate Low Low to high
Marketing Promotecapabilities
Promotecapabilities
Promotecapabilities; semi-standardized goods and services
Promotestandardized goods and services
Promotestandardized goods and services
Scheduling Complex, subjectto change
Complex Moderately complex Routine Routine
MIS 373: Basic Operations Management 12
PRODUCT AND SERVICE PROFILING
Product or service profilingLinking key product or service requirements to process
capabilities
Key dimensions relate too Range of products or services that can be processedo Expected order sizeso Expected frequency of schedule changes
DISCUSSION
Work with a partner and match the following products or services with the best process
Ice-cream manufacturer
Automatic carwash
Steel
Books
Airlines
Surgery
Movie theater
Sugar
Beer
Flour
Job-shop
Repetitive
Continuous
Batch
Products/Services Processes
Tips: Think in terms of those key dimensions:o Range of products or services that can be processedo Expected order sizeso Expected frequency of schedule changes
MIS 373: Basic Operations Management 14
TECHNOLOGY
• Technological Innovation• The discovery and development of new or improved products,
services, or processes for producing or providing them
• Technology• The application of scientific discoveries to the development and
improvement of products and services and/or the processes that produce or provide them
• Process technology includes methods, procedures, and equipment used to produce goods and provide services.
• RFID, online banking, 3D printing, …
MIS 373: Basic Operations Management 15
FACILITIES LAYOUT
• Layout• The configuration of departments, work centers, and equipment, with
particular emphasis on movement of work (customers or materials) through the system
• Facilities layout decisions arise when:• Designing new facilities• Re-designing existing facilities
• The basic objective of layout design is to facilitate a smooth flow of work, material, and information through the system.
MIS 373: Basic Operations Management 16
BASIC LAYOUT TYPES
• Product layout • Layout that uses standardized processing operations to
achieve smooth, rapid, high-volume flow
• Process layout• Layout that can handle varied processing requirements
• Fixed position layout• Layout in which the product or project remains stationary,
and workers, materials, and equipment are moved as needed
• Combination layouts
MIS 373: Basic Operations Management 17
PRODUCT LAYOUTS
• Product layout • Layout that uses standardized processing operations to achieve
smooth, rapid, high-volume flow• How?
Used for Repetitive ProcessingRepetitive or Continuous
Raw materialsor customer
Finished item
Station 2
Station 3
Station 4
Material and/or labor
Material and/or labor
Material and/or labor
Material and/or labor
Station 1
MIS 373: Basic Operations Management 18
PRODUCT LAYOUTS
• Although product layouts often follow a straight line, a straight line is not always the best, and layouts may take an L, O, S, or U shape. Why?
• L:• O:• S:• U: more compact, increased communication facilitating team work,
minimize the material handling
Image source: mdcegypt.com
MIS 373: Basic Operations Management 19
NON-REPETITIVE PROCESSING: PROCESS LAYOUTS
• Process layouts• Layouts that can handle varied processing requirements
Used for Intermittent processingJob Shop or Batch
Dept. A
Dept. B Dept. D
Dept. C
Dept. F
Dept. E
20
PRODUCT LAYOUTS
Advantages
• High rate of output
• Low unit cost
• Labor specialization
• Low material handling cost per unit
• High utilization of labor and equipment
• Established routing and scheduling
• Routine accounting, purchasing, and inventory control
DisadvantagesCreates dull, repetitive jobsPoorly skilled workers may not
maintain equipment or quality of output
Fairly inflexible to changes in volume or product or process design
Highly susceptible to shutdownsPreventive maintenance, capacity
for quick repair and spare-parts inventories are necessary expenses
Individual incentive plans are impractical
MIS 373: Basic Operations Management
21
PROCESS LAYOUTS
Advantages
• Can handle a variety of processing requirements
• Not particularly vulnerable to equipment failures
• General-purpose equipment is often less costly and easier and less costly to maintain
• It is possible to use individual incentive systems
Disadvantages
• In-process inventories can be high
• Routing and scheduling pose continual challenges
• Equipment utilization rates are low
• Material handling is slow and less efficient
• Complicates supervision
• Special attention necessary for each product or customer
• Accounting, inventory control, and purchasing are more complex
MIS 373: Basic Operations Management
MIS 373: Basic Operations Management 22
FIXED POSITION LAYOUTS
• Fixed Position Layout• Layout in which the product or project remains stationary, and
workers, materials, and equipment are moved as needed• E.g., farming, firefighting, road building, home building, remodeling
and repair, and drilling for oil
MIS 373: Basic Operations Management 23
COMBINATION LAYOUTS
• Some operational environments use a combination of the three basic layout types:
• Hospitals• Supermarket• Shipyards
• Some organizations are moving away from process layouts in an effort to capture the benefits of product layouts
MIS 373: Basic Operations Management 24
LINE BALANCINGLine balancing
The process of assigning tasks to workstations in such a way that the workstations have approximately equal time requirements
Goal:Obtain task grouping that represent approximately equal time
requirements since this minimizes idle time along the line and results in a high utilization of equipment and labor
Why is line balancing important?1. It allows us to use labor and equipment more efficiently.2. To avoid fairness issues that arise when one workstation must
work harder than another.• Input
• Tasks sequencing (precedence diagram)• Tasks time• Operating time
MIS 373: Basic Operations Management 25
PRECEDENCE DIAGRAM
• Precedence diagram• A diagram that shows elemental tasks and their
precedence requirements
Task Duration (min)
Immediate predecessor
a Select material 0.1 -
b Make petals 1.0 a
c Select rhinestones
0.7 -
d Glue rhinestones
0.5 b, c
e Package 0.2 d
MIS 373: Basic Operations Management 26
CYCLE TIME
• Cycle time• The maximum time allowed at each workstation to
complete its set of tasks on a unit• Minimum Cycle Time = longest task time = 1.0 min• Maximum Cycle time = Σt = sum of task time = 2.5 min
MIS 373: Basic Operations Management 27
OUTPUT RATE OF A LINE
• Cycle time also establishes the output rate of a line
Cycle time = Operating time per
day
Desired output rate
Output rate = Operating time per
day
Cycle time
MIS 373: Basic Operations Management 28
HOW MANY WORKSTATIONS ARE NEEDED?
• The required number of workstations is a function of:• Desired output rate• The ability to combine tasks into a workstation
• (theoretical) Minimum number of stations
Nmin= ∑ t
Cycle time
where
Nmin = theoretical minimum number of stations
∑ t = sum of task times
MIS 373: Basic Operations Management 29
HOW MANY WORKSTATIONS ARE NEEDED?
• The required number of workstations is a function of:• Desired output rate• The ability to combine tasks into a workstation
• (theoretical) Minimum number of stations
Nmin= ∑ t
Cycle time
where
Nmin = theoretical minimum number of stations
∑ t = sum of task times
Q: Why this is a theoretical value?A: There are often scraps or idle times.
Example: 4 tasks, each require 6 hours to finishA station can handle 8 hours amount of tasks a day.You will need 4 stations to complete all tasks, instead of 3.Nmin = (6+6+6+6) / 8 = 3
MIS 373: Basic Operations Management 30
DESIGNING PRODUCT LAYOUTS
Some Heuristic (Intuitive, may not result in optimal solution) Rules:Assign tasks in order of most following tasks
Count the number of tasks that follow
Assign tasks in order of greatest positional weight. Positional weight is the sum of each task’s time and the times of
all following tasks.
MIS 373: Basic Operations Management 31
EXAMPLE: ASSEMBLY LINE BALANCING
• Arrange tasks (shown in the figure) into three workstations• Assume the cycle time of each workstation is 1.2 min.• Assign tasks in order of the most number of followers• Break tie using greatest positional weight
MIS 373: Basic Operations Management 32
• Assign tasks in order of the most number of followers
WorkstationTimeRemaining Eligible
AssignTask
RevisedTime Remaining
StationIdle Time
1 1.2 a, c
2
3
Start with CT (1.2 min. in this example)
MIS 373: Basic Operations Management 33
• Assign tasks in order of the most number of followers
WorkstationTimeRemaining Eligible
AssignTask
RevisedTime Remaining
StationIdle Time
1 1.2 a, c a 1.1
2
3
MIS 373: Basic Operations Management 34
WorkstationTimeRemaining Eligible
AssignTask
RevisedTime Remaining
StationIdle Time
1 1.21.1
a, cc, b
a 1.1
2
3
MIS 373: Basic Operations Management 35
WorkstationTimeRemaining Eligible
AssignTask
RevisedTime Remaining
StationIdle Time
1 1.21.1
a, cc, b
ab
1.10.1
2
3
Break tie using greatest positional weight
MIS 373: Basic Operations Management 36
WorkstationTimeRemaining Eligible
AssignTask
RevisedTime Remaining
StationIdle Time
1 1.21.10.1
a, cc, bc
ab
1.10.1
2
3
MIS 373: Basic Operations Management 37
WorkstationTimeRemaining Eligible
AssignTask
RevisedTime Remaining
StationIdle Time
1 1.21.10.1
a, cc, bc
ab-
1.10.1
0.1
2
3
Can’t assign c to this workstation because the workstation doesn’t have enough time (0.1) to complete c (0.7).
MIS 373: Basic Operations Management 38
Start with CT (1.2 min. in this example)
WorkstationTimeRemaining Eligible
AssignTask
RevisedTime Remaining
StationIdle Time
1 1.21.10.1
a, cc, bc
ab-
1.10.1
0.1
2 1.2 c c 0.5
3
MIS 373: Basic Operations Management 39
WorkstationTimeRemaining Eligible
AssignTask
RevisedTime Remaining
StationIdle Time
1 1.21.10.1
a, cc, bc
ab-
1.10.1
0.1
2 1.20.5
cd
cd
0.50 0
3
MIS 373: Basic Operations Management 40
Start with CT (1.2 min. in this example)
WorkstationTimeRemaining Eligible
AssignTask
RevisedTime Remaining
StationIdle Time
1 1.21.10.1
a, cc, bc
ab-
1.10.1
0.1
2 1.20.5
cd
cd
0.50 0.0
3 1.2 e e 11.0
MIS 373: Basic Operations Management 41
WorkstationTimeRemaining Eligible
AssignTask
RevisedTime Remaining
StationIdle Time
1 1.21.10.1
a, cc, bc
ab-
1.10.1
0.1
2 1.20.5
cd
cd
0.50 0.0
3 1.2 e e 11.0
Idle time per cycle=0.1+0.0+1.0=1.1
MIS 373: Basic Operations Management 42
LAYOUT
a & b(0.1+1.0)
c & d(0.7+0.5)
e(0.2)
Task Duration (min)
Immediate predecessor
a Select material 0.1 -
b Make petals 1.0 a
c Select rhinestones
0.7 -
d Glue rhinestones
0.5 b, c
e Package 0.2 d
MIS 373: Basic Operations Management 43
MEASURING EFFECTIVENESS
• Balance delay (percentage of idle time)• Percentage of idle time of a line
• Efficiency• Percentage of busy time of a line
Balance Delay = Idle time per cycle
× 100%Nactual × Cycle time
where
Nactual = actual number of stations
Efficiency = 100% − Balance Delay
MIS 373: Basic Operations Management 44
EXAMPLE:MEASURING EFFECTIVENESS
WorkstationTimeRemaining Eligible
AssignTask
RevisedTime Remaining
StationIdle Time
1 1.21.10.1
a, cc, bc
ab-
1.10.1
0.1
2 1.20.5
cd
cd
0.50 0.0
3 1.2 e e 1.01.0
Efficiency = 100% – 30.55% = 69.45%
Percentage of idle time = [(0.1 + 0 + 1.0) ÷ (3 × 1.2)] × 100% = 30.55%
EXERCISE PROBLEMS
(Textbook page 267) Using the information contained in the table shown, do each of the following:
1. Draw a precedence diagram.2. Assuming an eight-hour workday,
compute the cycle time needed to obtain an output of 400 units per day.
3. Determine the minimum number of workstations required.
4. Assign tasks to workstations using this rule: Assign tasks according to greatest number of following tasks. In case of a tie, use the tiebreaker of assigning the task with the longest processing time first.
5. Compute the resulting percent idle time and efficiency of the system
EXERCISE SOLUTION
1. Draw a precedence diagram
EXERCISE SOLUTION
2. Assuming an eight-hour workday, compute the cycle time needed to obtain an output of 400 units per day
Cycle time =
Operating time per
day =
480 minutes per day = 1.2 minutes per
cycleDesired
output rate400 units per day
EXERCISE SOLUTION
3. Determine the minimum number of workstations required
Nmin= ∑ t
=
Cycle time
where
Nmin = theoretical minimum number of stations
∑ t = sum of task times
= 3.17 stations ( round to 4)
3.8 minutes per unit
1.2 minutes per cycle time per station
EXERCISE SOLUTION
4. Assign tasks to workstations using this rule: Assign tasks according to greatest number of following tasks. In case of a tie, use the tiebreaker of assigning the task with the longest processing time first.
EXERCISE SOLUTION
5. Compute the resulting percent idle time and efficiency of the system
Percent idle time =
Idle time per cycle
=
1.0 min.× 100%Nactual × Cycle
time4 × 1.2 min. = 20.83%
MIS 373: Basic Operations Management 51
DESIGNING PROCESS LAYOUTS
• The main issue in designing process layouts concerns the relative placement of the departments
• Measuring effectiveness• key objectives in designing process layouts are to
minimize:• transportation cost• distance• time
MIS 373: Basic Operations Management 52
INFORMATION REQUIREMENTS
• In designing process layouts, the following information is required:1. A list of work stations (departments) to be arranged and
their dimensions2. A projection of future work flows between the pairs of
work centers3. The distance between locations - and the cost per unit of
distance to move loads between them4. The amount of money to be invested in the layout5. A list of any special considerations6. The location of key utilities, access and exit points, etc.
MIS 373: Basic Operations Management 53
DESIGNING PROCESS LAYOUTSMINIMIZE TRANSPORTATION COSTS
• Goal:• Assign departments 1, 2, 3 to locations A, B, C in a way that
minimizes transportation costs.
• Heuristic:• Assign departments with the greatest interdepartmental work flow first
to locations that are closet to each other.
A B C
MIS 373: Basic Operations Management 54
EXAMPLE: MINIMIZE TRANSPORTATION COSTS
Location
From\To A B C
A - 20 40
B - 30
C -
Department
From\To 1 2 3
1 - 30 170
2 - 100
3 -
Pair Work flow
1-3 170
2-3 100
1-2 30
Trip
A-B 20
B-C 30
A-C 40
Distance
Work flow
A BC
20
40
30
Highest work flow
Closest
Place dept. 1&3
in A&B
MIS 373: Basic Operations Management 55
EXAMPLE: MINIMIZE TRANSPORTATION COSTS
• Place departments 1&3 in A&B (2 options)
• 2&3 have higher work flow than 1&2 (100>30)• 2&3 should be located closer than 1&2• C closer to B than to A (30<40)
• Solution:
11 33
A B C33 11
A B CA B
C20
40
30
1 3 2
30
170 100
A B C
Trip
A-B 20
B-C 30
A-C 40
Pair
Work flow
1-3 170
2-3 100
1-2 30
MIS 373: Basic Operations Management 56
CLOSENESS RATINGS
• Allows the considerations of multiple qualitative criteria
• Input from management or subjective analysis
• Indicates the relative importance of each combination of department pairs
Muther’s grid
MIS 373: Basic Operations Management 57
CLOSENESS RATINGS
A Absolutely necessaryE Very importantI ImportantO Ordinary importanceU UnimportantX Undesirable
• Muther’s grid
Dept. 1
Dept 2.
Dept 3.
Dept 4.
Dept. 5
Dept 6.
X O
A A
U
AA
X
E
A O
A
UI
X
Suppose this is the floor plan of your company, how would you arrange the six departments?
MIS 373: Basic Operations Management 58
Dept. 1
Dept 2.
Dept 3.
Dept 4.
Dept. 5
Dept 6.
X O
A A
U
AA
X
E
A O
A
UI
X
CLOSENESS RATINGS: EXAMPLE
1. List critical departments (either A or X):
A
1-2
1-3
2-6
3-5
4-6
5-6
X
1-4
3-6
3-4
MIS 373: Basic Operations Management
CLOSENESS RATINGS: EXAMPLE
6-59
2. Form a cluster of A links (beginning with the department that appears most frequently)
A
1-2
1-3
2-6
3-5
4-6
5-6
62
4
5
3. Take the remaining A links in order and add them to this cluster where possible (rearranging as necessary)Form separate clusters for departments that do not link with the main cluster.
62
4
51
3
Dept. 1
Dept 2.
Dept 3.
Dept 4.
Dept. 5
Dept 6.
X O
A A
U
AA
X
E
A O
A
UI
X
MIS 373: Basic Operations Management 60
CLOSENESS RATINGS: EXAMPLE
4. Graphically portray the X links
43
1
6
5. Adjust A cluster as necessary.
X
1-4
3-6
3-4
62
4
51
3
(in this case, the A cluster also satisfies the X cluster).
Dept. 1
Dept 2.
Dept 3.
Dept 4.
Dept. 5
Dept 6.
X O
A A
U
AA
X
E
A O
A
UI
X
MIS 373: Basic Operations Management 61
CLOSENESS RATINGS: EXAMPLE
62
4
51
3
6. Fit cluster into arrangement (e.g., 2x3)may require some trial and error.Departments are considered close not only when they touch side to side but also when they touch corner to corner.
7. Check for possible improvements
1 2 6
3 5 4
43
1
6
Dept. 1
Dept 2.
Dept 3.
Dept 4.
Dept. 5
Dept 6.
X O
A A
U
AA
X
E
A O
AU
I X
MIS 373: Basic Operations Management 62
KEY POINTS
• Process choice is demand driven.
• Process type and layout are a function of expected demand volume and the degree of customization that will be needed.
• Each process type and layout type has advantages and limitations that should be clearly understood when making process selection and layout decisions.
• Line balancing helps improving the efficiency of product layouts whereas Muther’s grid helps deciding process layouts